AoA - implication of retirement clause

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Max Payne (Querist)
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16 September 2010 Dear friends, this is a clause in the AoA of a Private ltd Co...

RETIREMENT OF DIRECTOR
16. One-third of the Directors of the company shall be liable to retire by rotation,
retiring directors being eligible for re-appointemnt

Now, I have some problems here....

1. The company has only 2 directors. (Cos the 3rd person passed away in March 2010). How to calculate one-third?

2. If one of these 2 directors has to retire, can there be a valid quorum for AGM?
Articles provide that there shall be at least 2 directors of the company.
PLUS, these two are the only shareholders! (Yes, the third person passed away in the first sub-question)
How to apply regulation 75 of Table A? Its not a board meeting??

3. Now, since sections 256 and 255 do not apply to private company, (this is not a subsidiary of a public co) can this director retire at a time other than AGM? The provision in articles is that the company shall appoint directors in general meeting....

4. Between these 2 directors, should the person who has been longest in office necessarily retire? Articles are silent in regarding the criterion for person who should retire?

Please suggest if adherence to rotation can be done away with, by back-date-altering-AoA-before-AGM or its ok to ignore the rotation for this time?

Jagruti (CS)

Jagruti (CS) (Expert)
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16 September 2010 Ans to ur query are:

1. In case of 2 person one should retire. As though sec 256 is not applicable to pvt Co. But it explains that if no. is not 1/3 than no. near to 1/3 will be considered which in ur case its 2.

Or else conduct one board meeting and appoint one more director, if possible & than go for retire by rotation.

2. In AGM of private Company quorum is 2 person presonally present. or as per Articles. Now retire by roration in AGM and present of individual as Director has nothing to do with quorum of AGM. As in AGM the director who retire will vote in a capacity of member and not director.

Also, disinterested quorum is applicable for Board meeting only, that too in public Company.

3. Though Sec 255 & 256 is not applicable but as articles of Company states u have to retire than u have to comply in present AGM only.

4. Yes, the preson who retires need to be one who was longest in officde and if appointed on same date than decide by lot. U cannot do away with this provisions

5. Yes, you can do way with this provision of retirement by rotation by altering AoA back dated

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Max Payne

Max Payne (Querist)
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16 September 2010 Thank you for your valuable reply

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